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What is Digital Transformation in Telecom

What is Digital Transformation in Telecom

The process of asset management digital transformation in the telecom industry is well established. Successive generations of network infrastructure (presently manifested in the rollout of 5G mobile) have delivered the platform on which digital services can be delivered. However, a common challenge remains. All too often across the industry, the delivery (and therefore promise) of digital services hasn’t caught up.

The telecoms industry is subject to an interesting paradox: while connectivity and data traffic have increased following the introduction of 3G and 4G technologies, telecoms revenue has declined a bit in the face of reductions in CAPEX and OPEX as well as increases in debt. Investment in networks appears to have benefited OTTs, who monetize traffic while telco operators spend on their infrastructure to support this traffic.

By tapping into the thought leadership of key players in the industry, in this article we’ll learn where telecoms are headed but also where they come from.

digital transformation in telecom

What is Digital Transformation in Telecom

The question of what actually digital transformation in the telecoms industry is takes us to the core of the industry as is: it is hard to agree on what constitutes digital transformation, and to gauge where companies are in the process. However, digital transformation is happening worldwide, but CSPs need to speed up the pace of change.

At the same time, digital transformation means an end to traditional telco closed IT architectures. Open platforms and easily accessible APIs are required to support the development of both internally developed own-brand services, and externally developed third-party services.

Digital Transformation for telecoms also suggests that telcos need to expand their service portfolios to offer new suites of digital services, addressing new vertical markets, with strong revenue growth potential. Transformation is all about changing telcos so they can begin to make money on these new services to compensate for the fall in traditional services

What telecoms need to do to achieve digital transformation

The pressure’s on for telcos to go digital fast. They need to get customer-focused, enter partnerships where they’re not obscured by a big-name partner, and look for high value-added margins rather than a sluggish trickle of profits down the dumb pipe. Digital transformation has to provide a range of benefits to telcos that help address the key challenges facing the industry today.

Martin Creaner, ex-CEO of TMForum, author and Digital Transformation advisor, identified the things that telcos must do when planning their digital journey:

  • First, transformation must significantly improve the B2B and B2C customer experience if telcos wish to compete with OTT players.
  • Second, transformation needs to meaningfully boost a telco’s efficiency and agility.
  • And third, it must enable them to maximize revenue from both traditional and new digital services. If telcos can achieve all three, research from Huawei, the World Economic Forum, and other sources estimate that digital transformation could generate US$1.5 trillion in profits over the next ten years.

Digital transformation has to provide a range of benefits to telcos that help address the key challenges facing the industry today.

That’s why telecoms also have an opportunity like never before to monetize their assets and infrastructure. With revenue trends shrinking and connectivity demand at an all-time high, operators need to make some “no regrets” moves that will help them maximize their profits and increase their revenue sources:

  • Developing virtual platforms, for example software defined networks (SDN), network function virtualization (NFV) and cloud, to enable exponential traffic growth while keeping costs under control, and enabling an open environment for external developers;
  • Combining AI with real-time orchestration capabilities to automate processes and tasks and improve quality of service while lowering costs; and
  • Reducing the costs of providing seamless and ubiquitous wireless connectivity, including rolling out, provisioning and managing wireless networks.
mobile phone digital transformation

Journeys to the future

The biggest obstacle to overcome with digital transformation is to understand that it isn’t just a simple technology challenge – it covers every part of the telecoms business. Mr. Creaner sees digital transformation in telecom as a roadmap to the future with different journeys.

Journey 1: From discrete network elements to an autonomous virtualized communications and cloud infrastructure.

The telco’s infrastructure will evolve from discrete network elements to a highly autonomous set of communications and cloud infrastructure, which can be managed at extremely low cost. NFV/SDN next-gen networks are making this first journey a reality for many telcos, but the cost, complexity, and disruption are huge. 

Journey 2: From reactive product-specific security to uniformly orchestrated security.

Third parties will be increasingly involved in the delivery of digital services across channels provided by telcos. Frequently, these services have higher security requirements that necessitate complete, business-wide security transformation covering the full technology stack, service creation process, partners, physical environment, and all stakeholders that deliver and use a given service.  

No wonder why are working on Infrastructure Security as part of our use cases for telecoms.

Journey 3: From limited data exploitation to a uniformly orchestrated data-centric enterprise.

Telcos must develop a single coordinated approach for the collection, analysis, distribution, security, and monetization of big data derived from infrastructure, services, social channels, business, and third-party sources. The success of all entities in the digital economy will largely depend on how well they use data, both for internal business optimization and external monetization.    

Journey 4: From a closed management infrastructure to a platform for open services.

Platform business models are driving the global digital economy, but the role of telcos isn’t yet clear. However, it’s clear that telcos must evolve their closed environments, which focus on designing and delivering their own services, to open platforms for developing both their own and third-party services under a wide ecosystem.  

Journey 5: From a limited portfolio of own services to managing a diverse portfolio of own and third-party services.

As the digital economy expands, digital telcos must expand their service portfolios far beyond their current scope. They must also learn which service niches best suit their competencies and define how to manage these diverse service portfolios. They can do so by identifying their competitive advantages and the relative market strengths of competing OTT players. The chart below shows where telcos’ competitive strengths may lie and where they correspond to the currently under-developed OTT market position and investment.

Journey 6: From a limited set of supplier relationships to an open ecosystem of partnership relationships.

That is to say a digital telco can only expand its service portfolio by changing its approach to the wider ecosystem, engaging with more players, and developing ecosystem management processes that move at Internet speed rather than traditional telco speed. 

(Part of the reason why the Tower Automation Alliance exists in the first place.)

Journey 7: From a limited set of telco business models to multiple value creation and capture approaches.

A larger service portfolio will need to embrace a much wider range of value creation and capture models. Telcos need to transform in a way that lets them seamlessly pivot to a business model that enables a specific service to be successful, which may in turn require fundamental changes to financial processes, business case processes, and enterprise cost base.

Journey 8: From a vertical silo to flexible organization, culture, and operations.

A wide digital service portfolio that’s monetized via multiple channels and business models, and that’s delivered across an extensive partner ecosystem, requires commensurate organizational and cultural change, which is perhaps the most difficult transformation journey to map and the most painful to travel. But a new culture, set of skills, and operating style that adapts to different parts of the business are essential prerequisites for a digital telco. 

Journey 9: From focusing on own channels to market to adopting multiple channels for different vertical markets.

With a service portfolio that expands across multiple vertical markets, a digital telco will need to open up new channels to market to maximize revenue. These channels may be based on a specific vertical, location, or retail scenario, and they lack a service development capability. They may also require new operating processes, new ways of incentivizing employees, and new paths for aligning business criteria to vertical market expectations, rather than sticking to telco norms.  

Journey 10: From one dimensional management of customer relationships to 360o omni-channel management of the whole customer experience.

Many telcos are embarking on this transformation process, which requires changes to systems, processes, and culture. These changes can empower all key stakeholders to make smart decisions on-the-go based on the right data. An omni-channel CEM environment will enable digital telcos to capture, store, process, and expose customer data in near real time from all channels. 

The telecoms industry needs to grow from a limited set of supplier relationships to an open ecosystem of partnership relationships, fairly similar to the purpose of the Tower Automation Alliance.


It was common of the industry to look at transformation as a monolithic transformation program, primarily technical in nature, with the goal of becoming new-generation digital services providers. The reality is much more diverse and complex.

The need for change is urgent and in many telcos this journey is already underway. It involves implementing changes to the systems, processes, data-management, skills and culture across the telco, to ultimately align customer engagement experience with the best-in-class across all other consumer verticals.

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